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Retail and Terrorism Strategies for Prevention and Improved Communications with Federal Agencies
By Eric White, CHS-V, FABCHS

Retail, the second-largest industry in the US, generates $3.8 trillion in annual revenues and employs 12% of the American workforce. The retail industry fuels our economy, supplies our nation, and represents the very heart of capitalism and everything extremist groups hate about Americans and our way of life. Not only would a successful attack in a densely populated retail environment represent a symbolic blow to the Western way of life, it would also cause significant disruption to the US economy. It would create fear among consumers and slow retail sales. The iconic status of large and successful retail companies fuels terrorists’ desires to inflict destruction on them individually or collectively, and by disrupting the retail environment it could affect the public’s ability to access essential medication, food, and supplies.

However, retailers are limited in their ability to collect data, develop intelligence, and prevent acts of terrorism. They are primarily focused on business operations, efficiency, and maintaining margins, as they should be. At the same time, the risks are too great for both retailers and the nation to allow retailers to go unprepared for disaster.

In addition to being an appealing target for terrorists, retailers also face a common set of vulnerabilities. Retail stores offer open environments in which the public is welcome to come and go without security screenings. The consequences of security screenings or profiling in a retail environment would create fear and animosity in lawful customers and cause them to shop elsewhere. From a business continuity standpoint, large retailers use technology and some of the best logistics experts to get the right freight to a store at the right time. Controlling inventory levels is a critical component of the retail profit equation. This "just in time" philosophy and the tendency to leverage supplier convergence to receive the greatest discounts and achieve the most efficient operations are tenets of sophisticated retail operations. The more retailers control their supply pipeline and rely on single suppliers, the greater their risk if an incident were to interrupt the supply chain.

In addition, more and more merchandise purchased in U.S. retail stores is sourced from other countries. The 9/11 Commission Report identified container security as a primary vulnerability for the United States. While customs and border protection officials do their best to screen cargo, it is simply impossible to screen all containers effectively and also maintain the efficiency retailers require. An attack on our domestic port infrastructure or major ports of origin around the world, could significantly slow the receipt of needed merchandise and create unmanageable burdens for security inspections on government agencies or private companies.

These vulnerabilities are not only a risk to retailers, but endanger the entire country. The potential for economic damage is clearly serious; however, as a part of the private sector, retailers are often left without the vital information and resources needed to help prevent a terrorist attack or to respond to actionable intelligence.

While federal agencies strive to collect information, sort out threats from non-threats, and identify terrorism trends, they have not yet established an effective channel of communication and collaboration with retail and other private-sector industries. It is a challenging task, but the ability to mitigate risk as a result could be significant. The shortfalls as they stand now make collaboration difficult.

Lack of Communication

Public/private sector information sharing has been a topic of discussion for a decade. Public agencies only recently have recognized the value of developing open lines of communication with the private sector, specifically retail. Suspicious individuals, known terrorists, and aberrant behavior may be witnessed in private sector institutions and, if they have established rapport with local law enforcement or federal homeland security professionals, they can often provide vital information that could prevent an attack.

Unfortunately, in the vast majority of cases, the information simply "dies on the vine," due to the lack of an effective clearinghouse. The reported information either falls through the cracks or is never shared because of the risk of liability incurred by the retailer. Too often, fear of retaliation by the media or special interest groups, or being labeled a "terror-phobe," overrides the impulse to report concerning activities.

The power of collaboration and information sharing is demonstrated by the case dubbed "Operation Blackbird," in which individuals with ties to known terrorists used the theft and resale of baby formula to finance terrorist activities. After a truckload of baby formula driven by a known terrorist was seized in Texas, police began to collaborate with the FBI on the investigation. The National Retail Federation (NRF) compiled a 200-page report highlighting organized retail theft of baby formula across the nation, amounting to $7 billion in retail theft. This problem has been pinpointed; now, retailers and the FBI have a case study to help find solutions for sharing insight and details on this issue.

Conflicting Objectives

Retailers are caught between their desire to provide information that may be related to national security and protecting themselves against lawsuits and "trial by media." Consider this example: if a retail photo processing center receives photos dropped off by a man of Middle-Eastern descent containing detailed images of the inside of the White House and photos of stockpiled weapons, the retailer should rightfully be concerned. Often, because there is no direct access to a particular federal agency, the retailer’s only recourse is to make a report to local law enforcement or, worse yet, do nothing. The police may question the suspect but do not have much more than suspicion to follow up on the lead. The individual, or special interest groups designed to distract public attention from a growing problem and focus media attention on civil rights, may then attempt to sue the retailer for sharing the individual’s personal information, or for racial profiling. For these reasons, the retailer incurs a significant risk when it makes the decision to help authorities. The decision to report suspicious activity simply cannot be that difficult if we truly want to develop the intelligence necessary to protect our country in today’s dangerous environment.

When instructions are clear and retailers are protected, they are free to share the information authorities need. By contrast, consider the issue of child pornography. This crime is carefully regulated, and retailers are instructed to submit questionable photos of children for investigation. Because this is a mandate by each state, retailers in those states have an element of legal protection from lawsuits when submitting information, making it much easier and less painful for them to do the right thing.

One-way Information

The Patriot Act enables and requires private institutions to share suspicious financial information with federal agencies. It is, however, mostly one-sided, providing only facts with little context. For this reason, information is far more likely to be pushed up to federal agencies from retailers, but retailers rarely receive actionable information in return. With respect to the purchase of merchandise, much more can be done. Retailers could be told, for example, that they should be wary of high-volume purchases of a particular item or substance, but are not told details about the concern that would help them to effectively contribute to the investigation. A two-way flow of information is most effective.

The Value Retailers Can Provide

The potential for retailers to actively contribute to the war on terrorism is tremendous. For one thing, retailers have a wealth of grassroot level information that could reveal trends as well as specifics regarding terrorist activities at their roots. Consider retailers’ unique access to information on the ground and across the nation regarding the purchase of potentially hazardous substances. Point-of-sale systems capture information regarding purchasers of particular items, the volume purchased, combinations of purchases, and how they were paid for. Retailers are experts at analyzing this type of data to help market to the individual customers who shop there. The potential for retailers to flag transactions in which certain combinations of products are purchased together, or to note when volume purchases of certain items exceed an acceptable level, could be extremely valuable in tracking down specific individuals as well as to better understand how these terrorists conduct their work, or the geographic areas in which they are active. This kind of information is critical to federal agencies, but is often too granular and localized to be gleaned on its own. Retailers also operate some of the most well placed video surveillance systems, often both inside and outside their stores. Local authorities often rely on this capability when trying to piece together crimes in their community. It is much less likely these assets will be used to identify potential terrorists or concerning activity. The addition of video analysis has promulgated itself throughout the retail industry. According to Simmons Market Research, on any given Saturday between 2 and 4 p.m., nearly 35 million Americans will shop in retail stores. Chances are good that a few of them are up to no good, and federal agents would love to know who and where they are. Retailers might be able to tell them if they were just asked and given a modest level of support.

Retailers are also exceptional at responding to a crisis. Time after time, following hurricanes, earthquakes, floods, and other disasters of all kinds, retailers have demonstrated their ability to pick up, improvise where necessary and provide both business continuity as well as needed supplies and resources. Retailers are nimble, resourceful, and well trained on disaster response, allowing them to respond more effectively than other organizations. Given an understanding of the likely impact, location, and some other details, retailers can construct response plans that will help ensure quick recovery and critical aid to needed areas following a terrorist attack. Coordinating these capabilities in pre-planning exercises with federal officials, a more complete picture of resources and capabilities in specific U.S. regions can be created.

Leveraging Every Tool Available

The Department of Homeland Security’s urgent mission is to lead the unified national effort to secure the country and preserve our freedoms. While the DHS was created to secure our country against those who seek to disrupt the American way of life, its charter also includes preparation for and response to all hazards and disasters.

Retailers and homeland security professionals have practical business reasons and a patriotic duty to prepare for terrorist acts. The shared goal is to prevent or minimize casualties and the destruction of property and to provide business continuity as quickly as possible following a terrorist event. Awareness of risk is the first step toward protecting their critical operations, but they are also willing and able to harmonize efforts to assist in the broader mission. It only makes sense to use every asset in our arsenal to combat the threats to this nation, as it is certain that terrorists are using every tool in theirs.

White will present "Special Attention Required: Security and Response Planning for Special Events" on Thursday, September 23rd at the ABCHS national conference in Orlando, Florida.

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